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The aggregate demand curve in the figure above shifts rightward if
A)taxes are raised.
B)the Federal Reserve raises the interest rate.
C)potential GDP increases.
D)government expenditure increases.
E)the money wage rate falls.

Question

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The aggregate demand curve in the figure above shifts rightward if
A)taxes are raised. 
B)the Federal Reserve raises the interest rate. 
C)potential GDP increases. 
D)government expenditure increases. 
E)the money wage rate falls.

Quizplus · Accepted Answer

An increase in government expenditure boosts overall demand in the economy, causing the aggregate demand curve to shift rightward.

- The Aggregate Demand Curve in the Figure Above Shifts Rightward